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Things to Know When Canceling Your Car Insurance Policy

Wednesday, January 09, 2013 3:38:16 PM

The need to cancel a car insurance policy almost inevitably strikes during the course of a car owner’s lifetime. Whether it is because car insurance rates have gone up, or the insurance company has altered their policy in some way, the need to cancel will arise. What is important is knowing the proper steps to take when such a time comes.

1) Know what the policy says Before anything is done, know what type of insurance coverage is on the vehicle in question, and how much it is insured for. As well, be aware of how the payment structure of the car insurance policy works.

2) Contact the insurance provider Every insurance broker will follow different steps to cancel a policy, but there are several common things to watch out for. First, make sure to ask if there are any fees associated with canceling the policy.

Most providers will also have a form that they will require a policyholder to complete before the policy is cancelled. Even if an insurance company states that an over-the-phone cancellation is fine, it is still best to draft a letter announcing the intention to cancel. Make sure to obtain some sort of proof it has been sent, in case any issues arise.

Be prepared for the company to ask why the policy is being cancelled. There is nothing wrong will telling them the reasons for the cancellation, but there is also no obligation on the part of the consumer to do so.

3) Arrange for a new policy If the intention is to obtain a policy with another agency at a better car insurance rate, make sure to call them and arrange a date for the transfer of insurance services.

Make sure that both the old and new companies know the date on which the old policy is to end and the new one is to begin. If there is a gap in service and the car is in an accident, the result can be severe fines from the local police and a car insurance premium increase.

4) Make sure everyone is in the know If the car being covered is still being paid for via a car dealership or bank, they may need to be informed about the policy change. As well, some states will require that the DMV be notified of any change in a car insurance policy, so make sure to contact both the financing company for the car and also the DMV in the area to confirm if the new coverage is satisfactory.

Being aware of the process that goes along with canceling a car insurance policy will make sure all your bases are covered when you switch your car insurance.

Replacing a 1991hondacivic with a 1991hondacivic could raise insurance rates by 50%.

Calculator Assumptions

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Calculator assumptions are based on a hypothetical driver with excellent credit, a bachelor’s degree, and no lapse in coverage who drives 15,000 miles per year, has state minimum policy limits, a $500 deductible on collision and comprehensive coverage and uninsured motorist coverage.

Legal Disclaimer

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See "Calculator Assumptions" for certain assumptions used in this calculation. Calculation based on historical data which may not predict future results. You should not rely solely on this tool to determine how much car insurance rates may go up or go down when insuring a different vehicle. There are numerous factors you should consider, including the terms of your insurance policy, the laws in your state, and your past driving record, among others. Your use of this tool is governed by insuranceQuotes' Privacy Policy and Terms of Use.

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